Monday, March 11, 2019

Warehouse Keepers Gather to Discuss Automation, Cyber Attacks and Transforming Logistics   

Annual UKWA Conference Looks Forward to a Digital World

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Shipping News Feature UK – Last week Chester was once again the venue for the annual conference of the United Kingdom Warehousing Association (UKWA), and as usual there was a variety of information packed into the two day event. Much of this is due to the fact that the UKWA is being drawn further into the wider world of logistics together with its broadening spectrum of membership.

The prime objective of the organisation is to advise and support its members which now range from suppliers to retailers, all of which see a storage or transhipment element along their supply chain. A mark of this inclusivity is the title of the Conference itself, ‘Transforming Logistics for the Digital World’ and indeed the experts chosen to speak covered every aspect on the influence of advancing technologies, from preparing for Brexit to cyber criminals.

The Conference opened on the 5th March with a brief introduction from Chief Executive Peter Ward who, after thanking the bevy of sponsors who make the event possible, told how the UKWA would celebrate in this, its 75th year. He quoted the Roy T Bennett line ‘the past is merely a point of reference, not one of residence’ and pointed out how logistics is no longer a simple, linear process, but one replaced by multiple options driven by consumer demands.

Ward expressed his desire that the UKWA warehouse Portal, which allows members to trace where vacant space is available in their contemporaries facilities around the country becomes ‘not just the AirBnB of warehouse space, but to be serving up breakfast lunch and dinner etc.’ He continued:

”There is a chronic global labour shortage, we must ask, ‘is automation a partial cure?’ We must step up and embrace the new technologies and take on these new challenges.”

The first invited speaker was Walter Boettcher, the Director of Research and Forecasting at Canadian headquartered Colliers International, who opened with a partial apology after saying his head was exploding with all talk of Brexit. He admitted his predictions in 2013 had only been two thirds correct (not bad compared to many) but he opined that a hard Brexit, whilst causing volatility with inflationary pressures on wages in the short term, would stabilise in 6-18 months before normalising and seeing the return of investments thereafter.

Up next was another returning speaker, Kevin Mofid from Savills who had some interesting facts on current warehouse development policy, saying speculative warehouse schemes built in 2018 included a total of eleven million square feet, the highest since 2006, and 20% of which were taken by Amazon. There were less transactions but sizes have grown with an average for major developments of around 300,000 square feet.

Of particular interest was the fact that multi storey warehouses are coming more into the picture. This type of development is one which always looks good on the draughtsman’s table but is often resisted by operational savvy types who realise the key to efficient performance relies on the goods vehicles delivering and collecting being close to a stowage position. If loading a cargo unit takes 30 fork lift trips and you extend the distance from the stowage point by the equivalent of one minute each way then you just added an hour to the job.

As the conference was concerned with incoming technologies, there might be at last a way of reducing this impact using continuously working automated systems for part of the job and therefore the traditional bias against multi storey units may disappear, particularly as Mr Mofid pointed out, given the paucity of available urban space. The draft London plan, he said, included a consultation incorporating ‘beds and sheds’, the melding of logistics facilities into a residential environment, something being driven by political will.

The speech continued with a look at G-Park Docklands for which developer Gazeley is currently holding a consultation. This is proposed as the first three storey warehouse in the country, and is a speculative investment, built on 6 acres in Silvertown in East London, with a total of 426,000 square feet of space. The project is intended to conform to the capital’s authorities desire for a ‘last mile’ hub.

The property man also commented that vacancy rates had fallen in those urban areas, from 100 million square feet in 2008 to just 30 million last year. Rural sites were getting bigger with 192 sites countrywide having planning permission for a total of 160 million square feet of warehousing, whilst take up is now a more balanced affair shared between retailers, ecommerce operators and logistics interests.

There followed speeches from Gavin Masters of Maginus, a company which facilitates eCommerce, who illustrated how customer demands have never been higher and discussed the problem of retail returns and reputation saying customer satisfaction was now often a matter for discussion on social media. Buyers wanted next and same day deliveries with a simple return process yet many retailers neither knew, nor understood the cost of their online operations.

Warehouse contractors need to establish metrics to enable them to advise a retailer of where their costs go, averages deny visibility for slow product lines which are expensive, and an agile response was required using the appropriate IT system.

One of technology consultant Bearing Point’s representatives, Jeremy Hammant spoke of digitalisation ‘changing the game of business’ and stressed there are two forms of digital strategy; Business Optimisation and Business Transformation, before running through 12 key digital technologies from wearable tech in the warehouse to cloud based systems.

There followed a panel discussion and question and answer session with a set of heavy hitters in retail in which Ben Farrell (John Lewis), Chris Warn (Pentland Group), Ian Bartholomew (Urban Outfitters) and Rob Redmile (Dixons Carphone) worried about the ‘race to the bottom’ driven by consumer demand for ever faster deliveries and lowest price. There was, they stated collectively, no such thing as ‘free delivery’ and the industry should wake up to it. One waits with bated breath to see if anyone takes unilateral action.

At this point there was tacit agreement that there would really need to be some form of cooperation with regard to combining retail deliveries from different sources, whilst Ben Farrell raised a laugh when he stated that one of the most common customer complaints to John Lewis following a delivery was ‘I wanted it in one of your green vans’, snobbery trumping practicality seemingly. A lively session covered a multitude of retail delivery and ecommerce points, ably moderated by Natasha Tyrrell from Bearing Point.

Whilst the assembled members had been eagerly awaiting the final speech of the day from Karen Wheeler CBE, the Director General for Border Co-ordination, they were doubtless more than satisfied with her substitute, Tony Thomas from the Cross Government Directory Board who, to nobody’s surprise, had no earth shaking news regarding Brexit. He did however have a pocketful of statistics and explained how HMG has been preparing for the dreaded ‘no-deal’ scenario.

Mr Thomas said the Border Delivery Group had been simplified to provide ‘a single holistic approach’ which for the past 18 months gad focused on the possibility of a no-deal Brexit, with cross government teams visiting 135 ports and airports in order to assess what moves and infrastructure were necessary. It was then that the 15 locations likely to be most affected were prioritised. All decisions were made in conjunction with industry steering groups containing such as the UKWA acting under non-disclosure agreements to devise a strategy model.

It was decided to prioritise flow of traffic, with no additional checks by Customs with the consideration that ‘if it was OK before it probably still is’ but the policy is slightly constrained as the UK authorities can’t speak for the EU or individual states. The UK team were happy discussing reciprocation, particularly in the belief that this was of more benefit to the EU than the UK.

Mr Thomas went on to analyse the Channel Strait ports’ situation and that of other crossing points, Holyhead to Ireland, the Humber ports etc. and said that 106 technical notices had been published with Version 5 of the information now available on .gov.uk., in a Partnership Pack and on a variety of government videos on YouTube.

The government man explained that, although no states were allowed to discuss trade matters with the UK individually in accordance with an EU directive, ports, and other private operations, had continued to put individual and consensual plans in place to manage the situation and these discussions had been the source of much of the government’s own information.

Further discussions from such as supply chain consultancy Tokema continued, with that company’s Pierre Liguori putting his usual Gallic influence into the mix, running through the proposals on how the UK’s main EU trading partners were scheduled to react, Germany, with no-deal contingencies, a ‘major bureaucratic makeover’ planned immediately after Brexit, an investment plan for IT and 900 extra border staff.

Liguori said the Netherlands was the most prepared for no deal, extra space laid on for waiting vehicles and 1,000 extra Customs staff, many hired in Eastern Europe to avoid language problems. There are 35,000 SMEs which trade with the UK and have no experience of Customs procedures whatsoever and this was predicted to cause problems in the first week followed by a 17% fall in exports to the UK.

For his native country’s plans Mr Liguori seemed to have little regard, the figures for extra staff and investment have been quoted often but the work to rule actions taken by staff at the Channel crossing points already speaks volumes.

The second day of the Conference saw speeches on the importance of benchmarking from Lynn Parnell of Logistics Partners which has teamed up with the UKWA to build a confidential picture for members showing anonymously how they fare in a multitude of areas as against the rest of the industry. She was followed by The Real Apprenticeship Company’s Debbie Shandley, who pointed out that the Employers Levy netted the government £2.1 billion in 2017, with a similar amount thought to have been raised last year.

From that 2017 figure, all originally destined for reinvestment, £400 million remains unspent, meaning on April 5 that disappears forever into government coffers. If smaller companies, exempt from paying the levy, can partner with a bigger sponsor who does pay it, they can claw some of that money back, 25% of their unspent levy being gifted to the smaller employers.

More talk of employment followed from Peter Jones of Logistics Learning Alliance (LLA) which supports UKWA training programmes, who revealed that the students of the future believe only 18% will use books, as opposed to the 50% using eLearning technology. In conjunction with the UKWA, LLA has devised a basic warehouse training programme at minimal cost with a full suite of programmes scheduled including CPCs in warehouse supervising, management etc.

There was input from Kogan Page explaining the raft of industry books the publishers can make available to subscribers and then a surprisingly interesting piece from Simon Edwards at Aaron & Partners, which firm ‘polices’ the UKWA Terms and Conditions, hardly the easiest subject for discussion, but one he laid out with admirable accuracy making a few present conscious of the fact they might not actually understand the reality of Ts & Cs as much as they had previously thought.

The final panel discussion ‘Managing Cyber Risk in the Digital World’ saw Claire Russell from Perry Appleton, which offers a specialist cyber risk service to UKWA members, mediate a discussion between Neil Hare-Brown of Storm Guidance, the response specialists, Michelle Watson of Cyber Intelligent Partners and Davis Kessler for the Travelers Insurance group. Watson compared cyber attacks to cancer, saying, ‘as with terrorism, they only have to get it right once – you have to get it right every time’.

The points made (all to be found on the UKWA and the other relevant websites) were principally, act swiftly if hacked, that is get help, advise insurers but, as with anything, prevention is better than cure and, above all, spend money on training staff, they are the weak point. So, after a speech from Peter Ward to wrap this year’s Conference up, the gathered horde departed, certainly a little better informed on a range of relevant subjects, one of which sadly was not Brexit.

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